Kenya Fixed Income Market Update – 13th June 2025

1. T-Bills Market Performance

The T-bills market recorded continued investor interest with oversubscription for the sixth consecutive week, registering an overall subscription rate of 237.4%, slightly lower than the 255.9% posted the previous week.

• 91-day T-bill remained the most attractive, receiving Kshs 14.6 bn in bids against Kshs 4.0 bn offered (364.9% subscription rate), up from 197.9% the prior week.
• 182-day T-bill saw a drop in demand with a 25.7% subscription rate, down from 104.9%.
• 364-day T-bill posted a still-high 397.9% subscription, slightly below the previous week’s 430.0%.

Despite high demand, the government was highly selective, accepting only Kshs 17.2 bn of Kshs 57.0 bn bids received – a low 30.2% acceptance rate.

T-Bill Yields

• 91-day: ↓ 10.3 bps to 8.18%
• 182-day: ↓ 4.9 bps to 8.49%
• 364-day: ↓ 24.9 bps to 9.75%

2. Primary Bond Market

The government reopened two bonds to raise Kshs 50.0 bn for budgetary support:

• FXD1/2020/015: Coupon 12.8%, 9.7 years to maturity
• SDB1/2011/030: Coupon 12.0%, 15.7 years to maturity

The bond sale period runs from 10th to 18th June 2025.

3. Money Market Liquidity

• Interbank rate eased slightly by 10.6 bps to 9.7% from 9.8%, aided by government payments despite tax remittances.
• Interbank volumes surged by 121.2% to Kshs 17.5 bn, up from Kshs 7.9 bn the previous week.

4. Eurobond Performance

Yields on Kenya’s Eurobonds were on a downward trend. The standout was the 12-year Eurobond (2019) which fell by 17.1 bps to 9.4% from 9.6%.

5. Currency & Forex Reserves

• The Kenya Shilling depreciated marginally by 1.3 bps to Kshs 129.2/USD, though it remains stronger YTD (+5.1 bps).
• Forex Reserves rose by 3.4% to USD 10.9 bn, equivalent to 4.8 months of import cover, exceeding both statutory and EAC regional thresholds.

6. Monetary Policy Update

The CBK Monetary Policy Committee (MPC) met on 10th June 2025 and lowered the CBR by 25.0 bps to 9.75%, continuing a recent easing trend (325 bps since August 2024).

Key insights:

• Inflation remains within target (2.5%-7.5%), at 3.8% in May, down from 4.1%.
• MPC cited slow economic growth, stable core inflation, and global monetary easing as justification.
• Caution remains in place due to ongoing geopolitical tensions and global uncertainties.

7. Fuel Price Adjustments

Effective 15th June – 14th July 2025 (per EPRA):

• Super Petrol: ↑ by Kshs 2.7 to Kshs 177.3/litre (+1.5%)
• Diesel: ↓ by Kshs 2.0 to Kshs 162.9/litre (-1.2%)
• Kerosene: ↓ by Kshs 2.1 to Kshs 146.9/litre (-1.4%)

Outlook

The fixed income market remains resilient with strong investor appetite despite the rate cuts. The CBK’s accommodative stance may provide further support to domestic economic recovery. However, market watchers should remain alert to evolving macroeconomic and geopolitical risks which could affect yields and currency performance.

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